Forex Today: Europe in the eye of the storm

What you need to take care of on Friday, July 22:

The market's attention was on the EU on Thursday, amid a series of events taking place in the Union.

The most relevant was the European Central Bank monetary policy decision. The ECB hiked rates by 50 bps, the first hike in over a decade, and moved away from negative rates. The main issues that forced the ECB into taking more aggressive action were inflation and the ongoing crisis with Russia.

However, Gazprom resumed gas flows to the EU through the Nord Stream 1 pipeline. The German Energy Regulator noted that the pre-maintenance level of 40% capacity could be exceeded on this first day, providing additional relief to EUR buyers.

Finally, Italian Prime Minister Mario Draghi effectively resigned, and elections will be held by the second half of September. Italian President Sergio Mattarella has dissolved the Italian parliament, opening the door for a snap election on September 25.

The American dollar advanced after the ECB's decision, but easing US Treasury yields limited its gains. The EUR/USD pair finished the day just below the 1.0200 threshold. GBP/USD settled at around 1.1975.

US stocks managed to post modest gains, which put further pressure on the dollar.

Crude oil prices remained under pressure, with WTI settling at $96.30 a barrel. Gold advanced and finished the day at $1,717 a troy ounce.

Commodity-linked currencies posted modest gains against the dollar, with AUD/USD trading at 0.6910 and USD/CAD at 1.2880. Safe-haven JPY and CHF posted substantial gains vs their American rival.

The focus on Friday will be on growth-related figures, as S&P Global will publish the preliminary estimates of the July PMIs.

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